Sustainability

Environment

At the core corporate sustainability efforts at AES is an understanding of the environments in which we operate and a commitment to developing energy solutions in an environmentally responsible manner. Environmental stewardship and leadership are a key part of our business, and we strive to improve the environmental performance of every business we own. Our Environmental Management System (EMS), environmental measurement metrics and certifications and standards demonstrate our tangible commitment to environmental sustainability.

We also go beyond simply meeting environmental standards, and we work to develop the right energy solutions for the markets in which we operate. AES and our businesses have taken a leadership role in expanding energy storage solutions, in particular for hydroelectric, solar and wind, to make them more viable and relevant for the future. Additionally, in markets where fossil fuel generation is the right choice for development, we are working to ensure those resources are used in the most efficient, effective and responsible manner.

AES' Four Principles of Environmental Management

The foundation of AES' environmental management approach is embodied in the following four principles:

Meet or exceed the requirements of environmental rules and regulations imposed by local, regional, and national governments and by participating financial institutions.

Meet or exceed AES' Environmental Standards.

Make decisions on additional expenditures based on a number of factors including an evaluation of the local, regional and global environment where the term "environment" is broadly defined as the external surroundings or conditions within which people live, including ecological, economic, social and all other factors that determine quality of life and standard of living.

Seek continual improvement of the environmental performance at every AES business.

Environmental Management System and Metrics

AES has established an Environmental Management System (EMS), a series of environmental standards based on industry best practices, which set environmental performance requirements for each AES business worldwide.

Certification and Standards

Many AES businesses have elected to formally certify their Environmental Management System (EMS) to the ISO 14001 international standard. Approximately 50 percent of AES businesses with an EMS framework have formally certified, or are certifying, their programs. More than 75 percent of the AES workforce is located in businesses that operate, or may soon operate, under a certified ISO 14001 EMS.

Compliance with AES' EMS framework is verified internally under the AES integrated Environmental Health and Safety (EHS) audit program. Each audit finding is accompanied by a corrective action plan and an agreed-upon completion date.

Environmental Solutions Highlights

AES businesses take every opportunity to identify and continuously improve beneficial uses for coal combustion byproducts (CCB), to recycle used oil and to engage in water conservation activities wherever practical.

AES beneficially reuses approximately 28 percent of the 4.3 million short tons of CCB it generates every year.

We recycle approximately 48 percent of the 1.2 million gallons of used oil generated every year.

Annual Emission Rates

The data below represents AES's CO2, SO2, NOx, and mercury emissions resulting from our major fuel combustion units on an equity adjusted basis. From 2008 through 2011 we realized a general downward trend in emissions. In 2012, while SO2 emissions continued to decrease, CO2 emissions increased due primarily to the addition of Dayton Power and Light (DPL) coal facilities to the AES generation portfolio. The addition of DP&L assets represent a 2,830 MW increase in coal generation capacity on an equity owned basis.

We have been able to reduce SO2 emissions by managing our fuel diversity and employing better emission controls and scrubbers. The annual quantities of NOx emissions have been more volatile and dependent on the dispatch by fuel type and NOx emission controls available.

CO2 Emission Intensity

For the first time in six years, AES experienced an increase in CO2 emission intensity. This was primarily due to the November 2011 addition of Dayton Power and Light (DPL) coal fired facilities to the AES generation portfolio, which represented a 2,830 MW increase in coal generation capacity on an equity owned basis, and to the full year’s production at our Maritza (vs 7 months in 2011) and Angamos (both generation units on-line throughout the entire year) coal fired facilities. Prior to 2012, AES' CO2 emissions from its thermal power generation plants had decreased in each of the previous five years as a result of using a mix of fuels with lower carbon emissions potential, and improving average operating efficiency across our full fleet of thermal plants.

AES' CO2 emission intensity metrics are in part the result of economic and other factors, including an increased or decreased reliance on renewable energy in our generation mix. In 2012 production from renewable sources continued our upward trend to nearly 15% of our overall generation portfolio. This was due in large part to increases in solar generation from 30.4 GWh in 2010 to 86.2 GWh in 2011 and to 158.7 GWh in 2012 on an equity basis.

Technology Innovation

We utilize new technologies in the areas of fuel and waste, and we have made investments in complementary innovative technologies to control emissions and minimize water consumption.

Community Projects

Argentina

AES Paraná, an 845 MW combined cycle plant, was the first large thermoelectric power plant in the world to use biodiesel as a fuel source. This allows the plant to reduce emissions, convert soy beans and other vegetables into power and conserve the use of fossil fuels.

Brazil

AES Eletropaulo is leading the implementation of solar photovoltaic panels in a soccer stadium and a major park in São Paulo.

AES Eletropaulo and AES Sul implemented a series of efficiency initiatives, which resulted in the savings of 2,000 tons of CO2.

AES Tiete is developing a project to research alternative technologies for the implementation of geothermal electricity generation from low- temperature sources.

Bulgaria

Cameroon

Engineers at AES Sonel refurbished the Edea hydroelectric facility to increase production capacity while maintaining existing water flows. The project increased generating capacity by applying a zero-emission solution that traditionally would have relied on adding fuel oil capacity.

Chile

In Chile, the AES Nueva Renca plant installed a system to reduce nitrogen oxide emissions (NOx) from its gas turbine and supplementary burners by 60 percent.

Dominican Republic

AES Itabo reduced water consumption by approximately 20 percent by reusing treated wastewater for irrigation and cleaning rather than releasing it into the ocean.

AES Dominicana converts 100 percent of its coal combustion waste into a cement production ingredient, recycling more than 72,000 tons of ash annually.

El Salvador

At AES Nejapa, our landfill gas facility collects methane gas generated in a sanitary landfill that receives approximately 2,000 tons of waste per day, and it converts that gas into electricity with six 1-MW engines.

Jordan

The AES Amman East complex decreased water consumption by six percent through the reuse of evaporated pond water.

Kazakhstan

Ust-Kamenogorsk CHP installed high-efficiency nozzles at two of its coal-fired boilers, yielding a 20 percent reduction in the emission of nitrogen oxides. In addition, new flue gas ash-removal equipment at three other boilers reducing particulate matter emissions by more than two-thirds while also doubling sulfur emission reductions. Ust-Kamenogorsk CHP is expanding these projects to the facility’s other boilers and constructing a new cooling tower to decrease water consumption from the Ulba River by up to 42 percent.

Reducing Air Emissions Highlights

Mong Duong (Vietnam): Controls air emissions by prohibiting idling of vehicles, performing mandatory vehicle inspections, watering the site and installing a new, more energy-efficient tire-washing station.

DPL (USA): At the Stuart and Killen Stations, installed five Chiyoda scrubbers, which have an SO2 reduction rating of 95 percent. Scrubbers convert SO2 into high- quality gypsum for use by the wallboard industry.

Ensuring a Sustainable Future

AES is continually enhancing and strengthening our EMS process. For example, we are currently extending the scope of the EMS framework to major construction projects. We are also in the process of updating our corporate environmental awareness training courses. In addition, we are developing improved environmental impact assessment tools to help identify potential opportunities for improvement.

Resource Conservation and Protection Highlights

AES Eletropaulo (Brazil): Leading the installation of solar photovoltaic panels at the New Corinthians Stadium (proposed venue for 2014 FIFA World Cup soccer) and in Rio Lobos Park in the City of São Paulo.

AES Itabo (Dominican Republic): Decreased water consumption by 20 percent through the reuse of wastewater for irrigation, road cleaning and bottom ash.

AES Amman East (Jordan): Decreased water consumption by six percent through the reuse of evaporation pond water for blowdown quenching.

Ust-Kamenogorsk CHP (Kazakhstan): Constructing a new cooling tower to decrease water consumption from the Ulba River by up to 47.9 percent.

Southland Alamitos (USA): Supports local efforts to clean and restore the Los Cerritos Wetlands in Alamitos Bay using natural tides, currents and a boom installed upstream of plant's intake.

Biodiversity and Archeological Resources Highlights

AES Electropaulo (Brazil): Works with local institutions to establish indicators of environmental impact on primate populations that inhabit places with potential interference from electrical systems. Findings will be applied to reduce potential impacts and improve both new and existing projects.

AES Tietê (Brazil): Protects more than 100 archeological sites, and has restored the Pacu fish to native habitats by releasing more than 2.5 million fish per year, allowing the Pacu to be removed from the endangered species list.

AES Changuinola (Panama): Planting 880,250 trees in the Changuinola river basin to reforest approximately 800 hectares. Trees are supplied by local nurseries created to support this effort.

EHS Leaders (El Salvador): Built nests for the local sea turtles at beach in El Salvador.

AES El Salvador: Since 2007, recycled more than 95,063 pounds of paper annually, and donated proceeds to “adopt” and protect 1,069 hectares in local national parks.

AES Panamá: Works with local schools to recycle solid waste.

AES Definition of Environment

The external surroundings or conditions within which people live, including ecological, economic, social and all other factors that determine quality of life and standard of living.

Reducing Air Emissions Highlights

Mong Duong (Vietnam): Controls air emissions by prohibiting idling of vehicles, performing mandatory vehicle inspections, watering the site and installing a new, more energy-efficient tire-washing station.

DPL (USA): At the Stuart and Killen Stations, installed five Chiyoda scrubbers, which have an SO2 reduction rating of 95 percent. Scrubbers convert SO2 into high-quality gypsum for use by the wallboard industry.